Chapter 101. General Provisions And Office Of Public Utility Counsel

Subchapter A. General Provisions

Section 101.001. Short Title.

This subtitle may be cited as the Gas Utility Regulatory Act.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 101.002. Purpose And Findings.

(a) This subtitle is enacted to protect the public interest inherent in the rates and services of gas utilities. The purpose of this subtitle is to establish a comprehensive and adequate regulatory system for gas utilities to assure rates, operations, and services that are just and reasonable to the consumers and to the utilities.

(b) Gas utilities are by definition monopolies in the areas they serve. As a result, the normal forces of competition that regulate prices in a free enterprise society do not operate. Public agencies regulate utility rates, operations, and services as a substitute for competition.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 101.003. Definitions.

In this subtitle:

(1) "Affected person" means:

(A) a gas utility affected by an action of a regulatory authority;

(B) a person whose utility service or rates are affected by a proceeding before a regulatory authority; or

(C) a person who:

(i) is a competitor of a gas utility with respect to a service performed by the utility; or

(ii) wants to enter into competition with a gas utility.

(2) "Affiliate" means:

(A) a person who directly or indirectly owns or holds at least five percent of the voting securities of a gas utility;

(B) a person in a chain of successive ownership of at least five percent of the voting securities of a gas utility;

(C) a corporation that has at least five percent of its voting securities owned or controlled, directly or indirectly, by a gas utility;

(D) a corporation that has at least five percent of its voting securities owned or controlled, directly or indirectly, by:

(i) a person who directly or indirectly owns or controls at least five percent of the voting securities of a gas utility; or

(ii) a person in a chain of successive ownership of at least five percent of the voting securities of a gas utility;

(E) a person who is an officer or director of a gas utility or of a corporation in a chain of successive ownership of at least five percent of the voting securities of a gas utility; or

(F) a person determined to be an affiliate under Section 101.004.

(3) "Allocation" means the division among municipalities or among municipalities and unincorporated areas of the plant, revenues, expenses, taxes, and reserves of a gas utility used to provide gas utility service in a municipality or for a municipality and unincorporated areas.

(4) "Corporation" means a domestic or foreign corporation, joint-stock company, or association, and each lessee, assignee, trustee, receiver, or other successor in interest of the corporation, company, or association, that has any of the powers or privileges of a corporation not possessed by an individual or partnership. The term does not include a municipal corporation, except as expressly provided by this subtitle.

(5) "Counsellor" means the chief executive of the Office of Public Utility Counsel.

(6) "Facilities" means all of the plant and equipment of a gas utility and includes the tangible and intangible property, without limitation, owned, operated, leased, licensed, used, controlled, or supplied for, by, or in connection with the business of the gas utility.

(7) "Gas utility" includes a person or river authority that owns or operates for compensation in this state equipment or facilities to transmit or distribute combustible hydrocarbon natural gas or synthetic natural gas for sale or resale in a manner not subject to the jurisdiction of the Federal Energy Regulatory Commission under the Natural Gas Act (15 U.S.C. Section 717 et seq.). The term includes a lessee, trustee, or receiver of a gas utility. The term does not include:

(A) a municipal corporation;

(B) a person or river authority to the extent the person or river authority:

(iii) transports, delivers, or sells natural gas for fuel for irrigation wells or any other direct agricultural use;

(C) a person to the extent the person:

(i) sells natural gas for use as vehicle fuel;

(ii) sells natural gas to a person who later sells the natural gas for use as vehicle fuel; or

(iii) owns or operates equipment or facilities to sell or transport natural gas for ultimate use as vehicle fuel;

(D) a person not otherwise a gas utility who furnishes gas or gas service only to itself, its employees, or its tenants as an incident of employment or tenancy, if the gas or gas service is not resold to or used by others; or

(E) a person excluded from being considered a gas utility under Section 121.007.

(8) "Municipally owned utility" means a utility owned, operated, and controlled by a municipality or by a nonprofit corporation the directors of which are appointed by one or more municipalities.

(9) "Order" means all or a part of a final disposition by a regulatory authority in a matter other than rulemaking, without regard to whether the disposition is affirmative or negative or injunctive or declaratory. The term includes the setting of a rate.

(10) "Person" includes an individual, a partnership of two or more persons having a joint or common interest, a mutual or cooperative association, a limited liability company, and a corporation.

(11) "Proceeding" means a hearing, investigation, inquiry, or other procedure for finding facts or making a decision under this subtitle. The term includes a denial of relief or dismissal of a complaint.

(12) "Rate" means:

(A) any compensation, tariff, charge, fare, toll, rental, or classification that is directly or indirectly demanded, observed, charged, or collected by a gas utility for a service, product, or commodity described in the definition of gas utility in this section; and

(13) "Regulatory authority" means either the railroad commission or the governing body of a municipality, in accordance with the context.

(14) "Service" has its broadest and most inclusive meaning. The term includes any act performed, anything supplied, and any facilities used or supplied by a gas utility in the performance of the utility's duties under this subtitle to its patrons, employees, other gas utilities, and the public. The term also includes the interchange of facilities between two or more gas utilities.

(15) "State agency" has the meaning assigned by Section 572.002, Government Code, to the extent the state agency must obtain the approval described by Section 31.401(a), Natural Resources Code.

(16) "Test year" means the most recent 12 months, beginning on the first day of a calendar or fiscal year quarter, for which operating data for a gas utility are available.

Section 101.004. Person Determined To Be Affiliate.

(a) The railroad commission may determine that a person is an affiliate for purposes of this subtitle if the railroad commission after notice and hearing finds that the person:

(1) actually exercises substantial influence or control over the policies and actions of a gas utility;

(2) is a person over which a gas utility exercises the control described by Subdivision (1);

(3) is under common control with a gas utility; or

(4) actually exercises substantial influence over the policies and actions of a gas utility in conjunction with one or more persons with whom the person is related by ownership or blood relationship, or by action in concert, that together they are affiliated with the gas utility within the meaning of this section even though neither person may qualify as an affiliate individually.

(b) For purposes of Subsection (a)(3), "common control with a gas utility" means the direct or indirect possession of the power to direct or cause the direction of the management and policies of another, without regard to whether that power is established through ownership or voting of securities or by any other direct or indirect means.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 101.005. Administrative Procedure.

Chapter 2001, Government Code, applies to a proceeding under this subtitle except to the extent inconsistent with this subtitle.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 101.006. Cumulative Effect; Application To Gas Utilities.

(a) This subtitle is cumulative of laws existing on September 1, 1983, relating to the jurisdiction, power, or authority of the railroad commission over a gas utility, and, except as specifically in conflict with this subtitle, that jurisdiction, power, and authority are not limited by this subtitle.

(b) This subtitle applies to all gas utilities, including a gas utility that is under the jurisdiction, power, or authority of the railroad commission in accordance with a law other than this subtitle.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 101.007. Liberal Construction.

This subtitle shall be construed liberally to promote the effectiveness and efficiency of regulation of gas utilities to the extent that this construction preserves the validity of this subtitle and its provisions.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 101.008. Construction With Federal Authority.

This subtitle shall be construed to apply so as not to conflict with any authority of the United States.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Subchapter B. Office Of Public Utility Counsel

Section 101.051. Office Of Public Utility Counsel.

The independent office of public utility counsel represents the interests of residential consumers.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 101.052. Office Powers And Duties.

(a) The office:

(1) may appear or intervene as a party or otherwise represent residential consumers, as a class, in appeals to the railroad commission only at the written request of an affected municipality's governing body;

(2) may initiate or intervene as a matter of right or otherwise appear in a judicial proceeding that involves an action taken by the railroad commission in a proceeding in which the office was a party;

(3) is entitled to the same access as a party, other than railroad commission staff, to records gathered by the railroad commission under Section 102.203;

(4) is entitled to discovery of any nonprivileged matter that is relevant to the subject matter of a proceeding or petition before the railroad commission;

(5) may represent an individual residential consumer with respect to the consumer's disputed complaint concerning utility services that is unresolved before the railroad commission; and

(6) may recommend legislation to the legislature that the office determines would positively affect the interests of residential consumers.

(b) The office may represent only as a class the residential consumers of a municipality that makes a request under Subsection (a)(1).

(c) This section does not limit the authority of the railroad commission to represent residential consumers.

(d) The appearance of the counsellor in a proceeding does not preclude the appearance of other parties on behalf of residential consumers. The counsellor may not be grouped with any other party.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 101.053. Prohibited Acts.

(a) The counsellor may not:

(1) have a direct or indirect interest in a gas utility company regulated under this subtitle; or

(2) provide legal services directly or indirectly to or be employed in any capacity by a gas utility company regulated under this subtitle, its parent, or its subsidiary companies, corporations, or cooperatives.

(b) The prohibition under Subsection (a) applies during the period of the counsellor's service and until the first anniversary of the date the counsellor ceases to serve as counsellor.

(c) This section does not prohibit a person from otherwise engaging in the private practice of law after the person ceases to serve as counsellor.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 101.054. Personnel.

(a) The counsellor may employ lawyers, economists, engineers, consultants, statisticians, accountants, clerical staff, and other employees as the counsellor determines necessary to carry out this subchapter.

(b) An employee receives compensation as prescribed by the legislature from the assessment imposed by Subchapter A, Chapter 16.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Chapter 102. Jurisdiction And Powers Of Railroad Commission And Other Regulatory Authorities

Subchapter A. General Powers Of Railroad Commission

Section 102.001. Railroad Commission Jurisdiction.

(a) The railroad commission has exclusive original jurisdiction over the rates and services of a gas utility:

(1) that distributes natural gas or synthetic natural gas in:

(A) areas outside a municipality; and

(B) areas inside a municipality that surrenders its jurisdiction to the railroad commission under Section 103.003; and

(2) that transmits, transports, delivers, or sells natural gas or synthetic natural gas to a gas utility that distributes the gas to the public.

(b) The railroad commission has exclusive appellate jurisdiction to review an order or ordinance of a municipality exercising exclusive original jurisdiction as provided by this subtitle.

Section 102.002. Limitation On Railroad Commission Jurisdiction.

Except as otherwise provided by this subtitle, this subtitle does not authorize the railroad commission to:

(1) regulate or supervise a rate or service of a municipally owned utility; or

(2) affect the jurisdiction, power, or duty of a municipality that has elected to regulate and supervise a gas utility in the municipality.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.003. Railroad Commission Powers Relating To Reports.

The railroad commission may:

(1) require a gas utility to report to the railroad commission information relating to the gas utility and an affiliate inside or outside this state as useful in administering this subtitle;

(2) establish the form for a report;

(3) determine the time for a report and the frequency with which the report is to be made;

(4) require that a report be made under oath;

(5) require the filing with the railroad commission of a copy of:

(A) a contract or arrangement between a gas utility and an affiliate;

(B) a report filed with a federal agency or a governmental agency or body of another state; and

(C) an annual report that shows each payment of compensation, other than salary or wages subject to federal income tax withholding:

(i) to residents of this state;

(ii) with respect to legal, administrative, or legislative matters in this state; or

(iii) for representation before the legislature of this state or any governmental agency or body; and

(6) require that a contract or arrangement described by Subdivision (5)(A) that is not in writing be reduced to writing and filed with the railroad commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.004. Report Of Substantial Interest.

The railroad commission may require disclosure of the identity and respective interests of each owner of at least one percent of the voting securities of a gas utility or its affiliate.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.005. Assistance To Municipality.

On request of a municipality, the railroad commission may advise and assist the municipality with respect to a question or proceeding arising under this subtitle. Assistance provided by the railroad commission may include aid to a municipality on a matter pending before the railroad commission, a court, or the municipality's governing body, such as making a staff member available as a witness or otherwise providing evidence.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.006. Administrative Hearings In Contested Cases.

(a) The railroad commission by rule shall provide for administrative hearings in contested cases to be conducted by one or more members of the railroad commission, by railroad commission hearings examiners, or by the utility division of the State Office of Administrative Hearings. The rules must provide for a railroad commission hearings examiner or the utility division of the State Office of Administrative Hearings to conduct each hearing in a contested case that is not conducted by one or more members of the railroad commission. A hearing must be conducted in accordance with the rules and procedures adopted by the railroad commission.

(b) The railroad commission may delegate to a railroad commission hearings examiner or to the utility division of the State Office of Administrative Hearings the authority to make a final decision and to issue findings of fact, conclusions of law, and other necessary orders in a proceeding in which there is not a contested issue of fact or law.

(c) The railroad commission by rule shall define the procedures by which it delegates final decision-making authority under Subsection (b) to a railroad commission hearings examiner or to the utility division of the State Office of Administrative Hearings.

(d) For purposes of judicial review, the final decision of a railroad commission hearings examiner or an administrative law judge of the State Office of Administrative Hearings in a matter delegated under Subsection (b) has the same effect as a final decision of the railroad commission unless a member of the commission requests formal review of the decision.

(e) The State Office of Administrative Hearings shall charge the railroad commission a fixed annual rate for hearings conducted by the office under this section only if the legislature appropriates money for that purpose. If the legislature does not appropriate money for the payment of a fixed annual rate under this section, the State Office of Administrative Hearings shall charge the railroad commission an hourly rate of not more than $90 per hour for hearings conducted by the office under this section.

Subchapter B. Restrictions On Certain Transactions

(a) Not later than the 60th day after the date the transaction takes effect, a gas utility shall report to the railroad commission:

(1) a sale, acquisition, or lease of a plant as an operating unit or system in this state for a total consideration of more than $1 million; or

(2) a merger or consolidation with another gas utility operating in this state.

(b) On the filing of a report with the railroad commission, the railroad commission shall investigate the transaction described by Subsection (a), with or without a public hearing, to determine whether the action is consistent with the public interest. In reaching its determination, the railroad commission shall consider the reasonable value of the property, facilities, or securities to be acquired, disposed of, merged, or consolidated.

(c) If the railroad commission finds that a transaction is not in the public interest, the railroad commission shall take the effect of the transaction into consideration in ratemaking proceedings and disallow the effect of the transaction if the transaction will unreasonably affect rates or service.

Section 102.052. Report Of Purchase Of Voting Stock In Gas Utility.

A gas utility may not purchase voting stock in another gas utility doing business in this state unless the utility reports the purchase to the railroad commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.053. Report Of Loan To Stockholders.

A gas utility may not loan money, stocks, bonds, notes, or other evidence of indebtedness to a person who directly or indirectly owns or holds any stock of the gas utility unless the gas utility reports the transaction to the railroad commission within a reasonable time.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Subchapter C. Records

Section 102.101. Records Of Gas Utility.

(a) Each gas utility shall keep and provide to the regulatory authority, in the manner and form prescribed by the railroad commission, uniform accounts of all business transacted by the gas utility.

(b) The railroad commission may prescribe the form of books, accounts, records, and memoranda to be kept by a gas utility, including:

(1) the books, accounts, records, and memoranda of:

(A) the provision of and capacity for service; and

(B) the receipt and expenditure of money; and

(2) any other form, record, and memorandum that the railroad commission considers necessary to carry out this subtitle.

(c) For a gas utility subject to regulation by a federal regulatory agency, compliance with the system of accounts prescribed for the particular class of utilities by the federal agency may be considered sufficient compliance with the system prescribed by the railroad commission. The railroad commission may prescribe the form of books, accounts, records, and memoranda covering information in addition to that required by the federal agency. The system of accounts and the form of books, accounts, records, and memoranda prescribed by the railroad commission for a gas utility or class of utilities may not be inconsistent with the systems and forms established by a federal agency for that gas utility or class of utilities.

(d) Each gas utility shall:

(1) keep and provide its books, accounts, records, and memoranda accurately and faithfully in the manner and form prescribed by the railroad commission; and

(2) comply with the directions of the regulatory authority relating to the books, accounts, records, and memoranda.

(e) In this section, "gas utility" includes a municipally owned utility.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.102. Maintenance Of Office And Records In This State.

(a) Each gas utility shall maintain an office in this state in a county in which some part of the utility's property is located. The gas utility shall keep in this office all books, accounts, records, and memoranda required by the railroad commission to be kept in this state.

(b) A book, account, record, or memorandum required by the regulatory authority to be kept in this state may not be removed from this state except as prescribed by the railroad commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.103. Communications With Regulatory Authority.

(a) The regulatory authority shall adopt rules governing communications with the regulatory authority or a member or employee of the regulatory authority by:

(1) a gas utility;

(2) an affiliate; or

(3) a representative of a gas utility or affiliate.

(b) A record of a communication must contain:

(1) the name of the person contacting the regulatory authority or member or employee of the regulatory authority;

(2) the name of the business entity represented;

(3) a brief description of the subject matter of the communication; and

(4) the action, if any, requested by the gas utility, affiliate, or representative.

(c) Records compiled under Subsection (b) shall be available to the public monthly.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.104. Jurisdiction Over Affiliate.

The railroad commission has jurisdiction over an affiliate that has a transaction with a gas utility under the railroad commission's jurisdiction to the extent of access to an account or a record of the affiliate relating to the transaction, including an account or a record of joint or general expenses, any portion of which may be applicable to the transaction.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Subchapter D. Required Reports And Filings

Section 102.151. Schedule Filings.

(a) A gas utility shall file with each regulatory authority schedules showing all rates that are:

(1) subject to the regulatory authority's original or appellate jurisdiction; and

(2) in effect for a gas utility service, product, or commodity offered by the gas utility.

(b) The gas utility shall file as a part of the schedules required under Subsection (a) each rule or regulation that relates to or affects:

(1) a rate of the gas utility; or

(2) a gas utility service, product, or commodity furnished by the gas utility.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.152. Depreciation Account.

The railroad commission shall require each gas utility or municipally owned utility to carry a proper and adequate depreciation account in accordance with:

(1) the rates and methods prescribed by the railroad commission under Section 104.054; and

(2) any other rule the railroad commission adopts.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.153. Accounts Of Profits And Losses.

A gas utility or municipally owned utility shall keep separate accounts showing profits or losses from the sale or lease of merchandise, including an appliance, a fixture, or equipment.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.154. Report Of Certain Expenses.

A regulatory authority may require a gas utility to annually report the utility's expenditures for:

(1) business gifts and entertainment; and

(2) advertising or public relations, including expenditures for institutional and consumption-inducing purposes.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Subchapter E. Audits And Inspections

Section 102.201. Inquiry Into Management And Affairs.

A regulatory authority may inquire into the management and affairs of each gas utility and shall keep itself informed as to the manner and method in which each gas utility is managed and its affairs are conducted.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.202. Audit Of Accounts.

A regulatory authority may require the examination and audit of the accounts of a gas or municipally owned utility.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.203. Inspection.

At a reasonable time for a reasonable purpose, a regulatory authority and, to the extent authorized by the regulatory authority, its counsel, agent, or employee may:

(1) inspect and obtain copies of the papers, books, accounts, documents, and other business records of a gas utility within its jurisdiction; and

(2) inspect the plant, equipment, and other property of a gas utility within its jurisdiction.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.204. Examinations Under Oath.

In connection with an investigation taken under Section 102.203, the regulatory authority may:

(1) examine under oath an officer, agent, or employee of a gas utility; or

(2) authorize the person conducting the action to make the examination under oath.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.205. Entering Premises Of Gas Utility.

(a) A member, agent, or employee of a regulatory authority may enter the premises occupied by a gas utility to conduct an inspection, examination, or test or to exercise any other authority provided by this subtitle.

(b) A member, agent, or employee of the regulatory authority may act under this section only during reasonable hours and after reasonable notice to the gas utility.

(c) A gas utility is entitled to be represented when an inspection, examination, or test is conducted on its premises. The gas utility is entitled to a reasonable time to secure a representative before the inspection, examination, or test begins.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.206. Production Of Out-of-state Records.

(a) A regulatory authority may require, by order or subpoena served on a gas utility, the production, at the time and place in this state that the regulatory authority designates, of any books, accounts, papers, or records kept by that gas utility outside this state or, if ordered by the railroad commission, verified copies of the books, accounts, papers, or records.

(b) A gas utility that fails or refuses to comply with an order or subpoena under this section violates this subtitle.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Subchapter F. General Provisions Relating To Proceedings Before Regulatory Authority

Section 102.251. Record Of Proceeding.

The regulatory authority shall keep a record of each proceeding before the authority.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Section 102.252. Right To Be Heard.

Each party to a proceeding before a regulatory authority is entitled to be heard by attorney or in person.